Last-minute kibosh on Manchester office sale

  The government has pulled the £48.5m sale of a Manchester office block to a German bank at the final hour because it would have breached the coalition’s new policy on disposals.   Hamburg-based HIH Global Invest, a subsidiary of MM Warburg & Co, was set to purchase Piccadilly Gate from Department for Transport subsidiary BRB (Residuary) at a 5.75% yield – a record for Manchester this cycle.   GVA Grimley ran the competitive bidding process.   But the sale of the 122,170 sq ft block, let to public sector tenants, was pulled around a week before completion.   A DfT spokesman said: “BRB (Residuary) is not proceeding with the sale of the freehold of Piccadilly Gate. The decision has been taken in the light of the emerging policy of the coalition government in respect of freehold properties.   “This policy means the government will not sell freeholds where government agencies remain in occupation as long-term tenants.”   Last week, John McCready, head of the Government Property Unit, said that assets should be retained where possible to give flexibility. Centrally run holding vehicles will be set up, starting in London and Bristol.   Manchester agents are angry about the aborted sale. One said: “It’s not cheap to get to this position. German funds all talk to each other, and will know the significant abortive costs HIH has incurred.”   Piccadilly Gate is let to tenants including the department of Communities and Local Government on 15-year leases with no breaks, and with five-yearly, upward-only rent reviews. CB Richard Ellis represented HIH.   daniel.cunningham@estatesgazette.com   To access all EGi news stories and commercial property data sign up for a free trial today, or visit the subscription options page to find out more.